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What if My Beneficiary Dies Before Me?

When determining a distribution plan for one’s assets, whether in a Will or a Trust, the first obvious question is: Who do you want to inherit your assets? This raises the following question, however: What happens if my beneficiary dies before me? There are various methods that one can use to pass their assets on to their beneficiaries. The three most common are known as Per Stirpes, Per Capita, or By Right of Representation. The difference between these terms can significantly affect what happens if your beneficiary dies before you.

Per Stirpes is a latin phrase for “by the branch.” When this language is used, it allows one’s estate to pass to one’s beneficiaries; if a beneficiary predeceases you, the beneficiary’s portion of the estate will pass equally to the beneficiary’s heirs.

     Per Stirpes Example: A has two children, B and C. B has two children, B1 and B2, and C has one child, C1. A leaves his estate to B and C, Per Stirpes. B has predeceased A, however.  A’s estate will be passed 25% to B1, 25% to to B2, and 50% to C.

Per Capita, which is latin for “by the head,” allows one’s estate to pass to one’s beneficiaries, however, if a beneficiary dies before you, their portion of the estate will not be passed down and distributed to their heirs.  Instead, their portion of the estate will be split among the other per capita beneficiaries who are still alive.

     Per Capital Example: A has two children, B and C. B has two children, B1 and B2, and C has one child, C1. A leaves his estate to B and C, Per Capita. B has predeceased A.  A’s estate will be passed 100% C.

Right of Representation:  Finally, the term by Right of Representation, allows one’s estate to pass in a manner very similar to Per Stirpes. The estate will first pass to one’s beneficiaries. If a beneficiary dies before you, their portion of the estate will be passed down to their heirs. However, the percentage the predeceased beneficiary’s heirs will receive may differ then when taking by Per Stirpes. If there is more than one predeceased beneficiary, the portion of the estate belonging to all the predeceased beneficiaries is first combined, and this combined portion is then equally divided between all heirs of the predeceased beneficiaries.

     Right of Representation Example 1:  A has two children, B and C. B has two children, B1 and B2, and C has one child, C1. A leaves his estate to B and C, by Right of Representation.  B has predeceased A.  A’s estate will be passed 25% to B1, 25% to to B2, and 50% to C, in the same manner as a Per Stirpes distribution.

     Right of Representation Example 2:  A has two children, B and C. B has two children, B1 and B2, and C has one child, C1. A leaves his estate to B and C, by Right of Representation. However, both B and C have predeceased A.  This changes the percentage of distribution to the heirs of the predeceased beneficiaries. A’s estate will now be passed 33.3% to B1, 33.3% to to B2, and 33.3% to C.

If “What happens if my beneficiary dies before me?” still remains a question in your mind, or if you need assistance in reviewing or preparing your Estate Plan, we welcome you to contact Attorney Christine Padilla for a free consultation.  The Law Office of Christine Padilla is pleased to provide personalized and comprehensive estate planning services to its clients.

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